Tag: AMD

Q2 earnings decline: now what? | Responsible Investor Weekly Newsletter, July 29th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Q2 earnings decline: now what?”, and was written on July 29th, 2023.

Weekly summary in a paragraph

The US stock market indices were higher this week, with all the major indices advancing on news of generally good earnings and positive economic data. The European stock market was also stronger though this week’s gain was offset by the Euro depreciating relative to the US Dollar. The 2-10y spread shrunk after two weeks of widening and is still inverted at -91 basis points. Economic data this week included the FED’s decision to hike by another 0.25%, as widely expected, and core PCE continuing to decelerate. The Bank of Japan surprised markets by announcing it first shift from a decade-long period of monetary easing. In corporate news, one third of the S&P500 companies reported Q2 earnings season with notable beats from Meta, Google and Intel. On the flipside, Procter & Gamble’s 2024 outlook disappointed and Chipotle’s earnings were mixed. Next week 170 S&P500 companies report Q2 earnings, including Apple, AMD, Amazon and Starbucks to name a few.

Asset classes weekly performance

This week the Dow finished +0.7% higher (+7.0% year to date) while the S&P500 gained +1.0% (+19.3% year to date), the Nasdaq jumped +2.0% (+36.8% year to date) and the Russell 2000 was +1.1% stronger (+12.5% year to date). Gold finished -0.2% lower (+3.7% year to date) while Silver slid -1.4% (-1.4% year to date). Crude Oil appreciated +1.3% (+5.8% year to date). The 10-y US treasury yield gained +1.5% (+4.6% year to date). The European stock market gave up +0.7% (+21.6% year to date). The Euro lost -0.95% against the US Dollar (+2.9% year to date).

Weekly pitch

With 51% of the S&P500 companies having reported Q2 earnings so far, an attempt to draw some preliminary conclusions can be made. Q2 earnings decline is presently -7.3%, lower than expectations of -7.0% at the beginning of the quarter. If this figure is confirmed, it would be the third quarterly earnings decline in a row and the highest since the disastrous Q2 2020 which was due to the pandemic. Even if the forecasted earnings growth in Q3 and Q4 were confirmed, the expected earnings growth for 2023 is a meager +0.4%. Therefore, responsible investors should exercise caution and maintain a healthy proportion of their portfolio in cash and hedges as well as a diversified portfolio with some exposure to the European stock market.

Weekly Portfolio Update

Here are this week’s movements: we have taken partial profits on our Meta (+129%) and Campari (+19.3%) long positions. We have accumulated our Disney, Raytheon and Zimmer Biomet Holdings long positions and initiated a short position on Molson Coors Brewing. Stop losses were triggered on our XPO Logistics, Rivian and Overstock short positions. Cash, US treasury bills, precious metals and hedges amount to 44.5% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

The Gap +13.4% (Apparel)

KraneShares CSI China Internet +12.7% (Internet services Chinese companies ETF)

Meta +10.6% (Tech)

Google +10.6% (Tech)

Yelp +9.0% (Tech)

Portfolio Asset Allocation

US stocks long positions 47% (unchanged)

EU stocks long positions 8.5% (unchanged)

US stocks short position 2.5% (reduced)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 30% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +11.9% (excl. dividends) vs the S&P500 gain of 12.5%.

Invest responsibly!!!

Why is Dr. Copper important for a healthy portfolio? | Responsible Investor Weekly Newsletter, May 13th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Why is Dr. Copper important for a healthy portfolio?”, and was written on May 13th, 2023.

Weekly summary in a paragraph

The US stock market indices finished mostly lower this week, with the exception of the Nasdaq, just like the previous week. The European stock market also finished lower but is still leading year to date, globally. The Bank of England raised interest rates again and stated that a recession is not expected in the UK. The 2-10y spread continues to be range-bound has an inverted value of -52 basis points. In terms of economic data, the CPI and the PPI indices published mid-week came in as expected, supporting the disinflation narrative. In corporate news, Disney disappointed while Li Auto beat expectations with a 66% year-on-year increase in car deliveries . While 92% of the S&P500 companies have now reported earnings, there are still a few to watch next week including Target, Walmart and Applied Materials.

Asset classes weekly performance

This week the Dow finished -1.1% lower (+0.5% year to date) while the S&P500 gave up -0.3% (+7.4% year to date), the Nasdaq advanced +0.4% (+17.4% year to date) and the Russell 2000 lost -1.1% (-1.2% year to date). Gold finished -1.34% lower (+7.34% year to date, we are long) while Silver tanked -6.8% (-1.9% year to date). Oil lost -4.9% (-9.3% year to date). The 10-y US treasury yield gave up -1.65% (-8.7% year to date). The European stock market finished -1.9% lower (+17.6% year to date). The Euro lost -1.5% against the US Dollar (+1.3% year to date).

Weekly pitch

Copper is such a critical metal for global economic growth, that over the years it has earned the title of “Doctor Copper”. Copper futures have been anticipating both bull and bear markets in the past, and many investors look at its price fluctuations with interest. After Covid hit, copper made higher lows and higher highs; this trend was broken in summer 2022 when, after peaking in March, its price made a lower low. The sharp decline this week could signal further pessimism in the global economy. Responsible investors should exercise caution and maintain a healthy proportion of their portfolio in cash and hedges as well as a diversified portfolio with some exposure to the European stock market. This week we have beaten the market, taken full profits on some long positions and initiated new long and short positions.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Silver ETF (+14.1%), Palantir Technologies (+9.9%), and AMD (+6.2%) long positions as well as on our Affirm (+7.6%) and Adobe (7.5%) short positions; partial sell stops were triggered on our Nasdaq ETF short position. We initiated a long positions on Tellurian and a short position on Affirm. Cash, precious metals and hedges amount to 41.5% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Palantir Technologies +28.2% (Tech)

Google +11.0% (Tech)

AMD +6.0% (Semiconductors)

Fortinet +4.9% (Electronic Tech)

Orsted +4.1% (Renewable Energy)

Portfolio Asset Allocation

US Long stock positions 49% (reduced)

EU Long stock positions 9.5% (unchanged)

US Short stock position 4.5% (unchanged)

Hedges 7.5% (reduced)

Silver & Gold 3% (reduced)

Cash 26.5% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +6.1% (excl. dividends) vs the S&P500 gain of +4.9%, which corresponds to a +1.2% market beat.

Invest responsibly!!!